Page 1587 TITLE 12 BANKS AND BANKING 4421, 4422 CHAPTER 46 GOVERNMENT SPONSORED ENTERPRISES

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1 Page 1587 TITLE 12 BANKS AND BANKING 4421, 4422 ter 6 of this title. For complete classification of this Act to the Code, see Short Title note set out under section 611 of this title and Tables. Section 4422 of this title, referred to in subsecs. (a) to (c)(1), was repealed by Pub. L , title VII, 740, July 21, 2010, 124 Stat Section 11(e)(8)(D) of such Act, referred to in subsec. (a)(2), probably means section 11(e)(8)(D) of the Federal Deposit Insurance Act, which is classified to section 1821(e)(8)(D) of this title. The Federal Deposit Insurance Act, referred to in subsec. (c)(2), is act Sept. 21, 1950, ch. 967, 2, 64 Stat. 873, which is classified generally to chapter 16 ( 1811 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under section 1811 of this title and Tables. PRIOR PROVISIONS A prior section 407 of Pub. L was renumbered section 407A and is classified to section 4407 of this title. EFFECTIVE DATE Section effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under Title 11, Bankruptcy, before such effective date, except as otherwise provided, see section 1501 of Pub. L , set out as an Effective Date of 2005 Amendment note under section 101 of Title National emergencies The provisions of this chapter may not be construed to limit the authority of the President under the Trading With the Enemy Act (50 U.S.C. App. 1 et seq.) or the International Emergency Economic Powers Act (50 U.S.C et seq.). (Pub. L , title IV, 407A, formerly 407, Dec. 19, 1991, 105 Stat. 2375; renumbered 407A, Pub. L , title IX, 906(d)(1), Apr. 20, 2005, 119 Stat. 169.) REFERENCES IN TEXT The Trading With the Enemy Act, referred to in text, is act Oct. 6, 1917, ch. 106, 40 Stat. 411, as amended, which is classified to sections 1 to 6, 7 to 39 and 41 to 44 of Title 50, Appendix, War and National Defense. For complete classification of this Act to the Code, see Tables. The International Emergency Economic Powers Act, referred to in text, is Pub. L , title II, Dec. 28, 1977, 91 Stat. 1626, which is classified generally to chapter 35 ( 1701 et seq.) of Title 50, War and National Defense. For complete classification of this Act to the Code, see Short Title note set out under section 1701 of Title 50 and Tables. SUBCHAPTER II MULTILATERAL CLEARING ORGANIZATIONS 4421, Repealed. Pub. L , title VII, 740, July 21, 2010, 124 Stat Section 4421, Pub. L , title IV, 408, as added Pub. L , 1(a)(5) [title I, 112(a)(3)], Dec. 21, 2000, 114 Stat. 2763, 2763A 391; amended Pub. L , title VII, 749(i), July 21, 2010, 124 Stat. 1748, defined terms used in this subchapter. Section 4422, Pub. L , title IV, 409, as added Pub. L , 1(a)(5) [title I, 112(a)(3)], Dec. 21, 2000, 114 Stat. 2763, 2763A 392, related to multilateral clearing organizations. EFFECTIVE DATE OF REPEAL Repeal effective on the later of 360 days after July 21, 2010, or, to the extent a provision of subtitle A ( ) of title VII of Pub. L requires a rulemaking, not less than 60 days after publication of the final rule or regulation implementing such provision of subtitle A, see section 754 of Pub. L , set out as an Effective Date of 2010 note under section 1a of Title 7, Agriculture. CHAPTER 46 GOVERNMENT SPONSORED ENTERPRISES Sec Congressional findings Definitions Protection of taxpayers against liability. SUBCHAPTER I SUPERVISION AND REGULATION OF ENTERPRISES PART A FINANCIAL SAFETY AND SOUNDNESS REGULATOR Establishment of the Federal Housing Finance Agency Director Duties and authorities of Director. 4513a. Federal Housing Finance Oversight Board. 4513b. Prudential management and operations standards Authority to require reports by regulated entities. 4514a. Study and reports on guarantee fees Personnel Funding Examinations Prohibition and withholding of executive compensation. 4518a. Limitation on bonuses to executives of Fannie Mae and Freddie Mac Authority to provide for review of regulated entities Minority and women inclusion; diversity requirements Annual reports by Director Public disclosure of final orders and agreements Limitation on subsequent employment Audits by GAO Information, records, and meetings Regulations and orders. PART B ADDITIONAL AUTHORITIES OF THE DIRECTOR SUBPART 1 GENERAL AUTHORITY Prior approval authority for products Housing Price Index Public access to mortgage information Annual housing report Fair housing Prohibition of public disclosure of proprietary information Enterprise guarantee fees Repealed. SUBPART 2 HOUSING GOALS Establishment of housing goals Single-family housing goals Multifamily special affordable housing goal Discretionary adjustment of housing goals Duty to serve underserved markets and other requirements Monitoring and enforcing compliance with housing goals Affordable housing allocations Housing Trust Fund Capital Magnet Fund. SUBPART 3 ENFORCEMENT Cease and desist proceedings Hearings Judicial review Enforcement and jurisdiction.

2 4501 TITLE 12 BANKS AND BANKING Page 1588 Sec Civil money penalties Public disclosure of final orders and agreements Notice of service Subpoena authority Repealed. PART C MISCELLANEOUS PROVISIONS Review of underwriting guidelines Studies of effects of privatization of FNMA and FHLMC Transition. SUBCHAPTER II REQUIRED CAPITAL LEVELS FOR REGULATED ENTITIES, SPECIAL ENFORCE- MENT POWERS, AND REVIEWS OF ASSETS AND LIABILITIES Risk-based capital levels for regulated entities Minimum capital levels Critical capital levels Capital classifications Supervisory actions applicable to undercapitalized regulated entities Supervisory actions applicable to significantly undercapitalized regulated entities Authority over critically undercapitalized regulated entities Notice of classification and enforcement action to Repealed Capital restoration plans Judicial review of Director action Reviews of enterprise assets and liabilities. SUBCHAPTER III ENFORCEMENT PROVISIONS Cease-and-desist proceedings Temporary cease-and-desist orders Hearings Judicial review Enforcement and jurisdiction Civil money penalties. 4636a. Removal and prohibition authority. 4636b. Criminal penalty Notice after separation from service Private rights of action Public disclosure of final orders and agreements Notice of service Subpoena authority Reporting of fraudulent loans Congressional findings The Congress finds that (1) the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation (referred to in this section collectively as the enterprises ), and the Federal Home Loan Banks (referred to in this section as the Banks ), have important public missions that are reflected in the statutes and charter Acts establishing the Banks and the enterprises; (2) because the continued ability of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation to accomplish their public missions is important to providing housing in the United States and the health of the Nation s economy, more effective Federal regulation is needed to reduce the risk of failure of the enterprises; (3) considering the current operating procedures of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Federal Home Loan Banks, the enterprises and the Banks currently pose low financial risk of insolvency; (4) neither the enterprises nor the Banks, nor any securities or obligations issued by the enterprises or the Banks, are backed by the full faith and credit of the United States; (5) an entity regulating the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation should have sufficient autonomy from the enterprises and special interest groups; (6) an entity regulating such enterprises should have the authority to establish capital standards, require financial disclosure, prescribe adequate standards for books and records and other internal controls, conduct examinations when necessary, and enforce compliance with the standards and rules that it establishes; (7) the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation have an affirmative obligation to facilitate the financing of affordable housing for low- and moderate-income families in a manner consistent with their overall public purposes, while maintaining a strong financial condition and a reasonable economic return; and (8) the Federal Home Loan Bank Act [12 U.S.C et seq.] should be amended to emphasize that providing for financial safety and soundness of the Federal Home Loan Banks is the primary mission of the Federal Housing Finance Board. (Pub. L , title XIII, 1302, Oct. 28, 1992, 106 Stat ) REFERENCES IN TEXT The Federal Home Loan Bank Act, referred to in par. (8), is act July 22, 1932, ch. 522, 47 Stat. 725, as amended, which is classified generally to chapter 11 ( 1421 et seq.) of this title. For complete classification of this Act to the Code, see section 1421 of this title and Tables. SHORT TITLE OF 2008 AMENDMENT Pub. L , 1(a), July 30, 2008, 122 Stat. 2654, provided that: This Act [see Tables for classification] may be cited as the Housing and Economic Recovery Act of Pub. L , div. A, 1001, July 30, 2008, 122 Stat. 2659, provided that: This division [see Tables for classification] may be cited as the Federal Housing Finance Regulatory Reform Act of SHORT TITLE Pub. L , title XIII, 1301, Oct. 28, 1992, 106 Stat. 3941, provided that: This title [enacting this chapter, amending sections 1422a, 1430, 1430b, 1451 to 1456, 1716 to 1719, 1723, 1723a, and 1723c of this title, sections 3132 and 5313 of Title 5, Government Organization and Employees, section 1905 of Title 18, Crimes and Criminal Procedure, and section 3534 of Title 42, The Public Health and Welfare, enacting provisions set out as notes under sections 1451, 1452, 1723, and 4562 of this title, and amending provisions set out as a note under section 1451 of this title] may be cited as the Federal Housing Enterprises Financial Safety and Soundness Act of Definitions For purposes of this chapter: (1) Affiliate Except as provided by the Director, the term affiliate means any entity that controls, is

3 Page 1589 TITLE 12 BANKS AND BANKING 4502 controlled by, or is under common control with, an enterprise. (2) Agency The term Agency means the Federal Housing Finance Agency established under section 4511 of this title. (3) Authorizing statutes The term authorizing statutes means (A) the Federal National Mortgage Association Charter Act; (B) the Federal Home Loan Mortgage Corporation Act; and (C) the Federal Home Loan Bank Act. (4) Board The term Board means the Federal Housing Finance Oversight Board established under section 4513a of this title. (5) Capital distribution (A) In general The term capital distribution means (i) any dividend or other distribution in cash or in kind made with respect to any shares of, or other ownership interest in, an enterprise, except a dividend consisting only of shares of the enterprise; (ii) any payment made by an enterprise to repurchase, redeem, retire, or otherwise acquire any of its shares, including any extension of credit made to finance an acquisition by the enterprise of such shares; and (iii) any transaction that the Director determines by regulation to be, in substance, the distribution of capital. (B) Exception Any payment made by an enterprise to repurchase its shares for the purpose of fulfilling an obligation of the enterprise under an employee stock ownership plan that is qualified under section 401 of title 26 or any substantially equivalent plan, as determined by the Director, shall not be considered a capital distribution. (6) Compensation The term compensation means any payment of money or the provision of any other thing of current or potential value in connection with employment. (7) Core capital The term core capital means, with respect to an enterprise, the sum of the following (as determined in accordance with generally accepted accounting principles): (A) The par or stated value of outstanding common stock. (B) The par or stated value of outstanding perpetual, noncumulative preferred stock. (C) Paid-in capital. (D) Retained earnings. The core capital of an enterprise shall not include any amounts that the enterprise could be required to pay, at the option of investors, to retire capital instruments. (8) Default; in danger of default (A) Default The term default means, with respect to a regulated entity, any adjudication or other official determination by any court of competent jurisdiction, or the Agency, pursuant to which a conservator, receiver, limited-life regulated entity, or legal custodian is appointed for a regulated entity. (B) In danger of default The term in danger of default means a regulated entity with respect to which, in the opinion of the Agency (i) the regulated entity is not likely to be able to pay the obligations of the regulated entity in the normal course of business; or (ii) the regulated entity (I) has incurred or is likely to incur losses that will deplete all or substantially all of its capital; and (II) there is no reasonable prospect that the capital of the regulated entity will be replenished. (9) Director The term Director means the Director of the Federal Housing Finance Agency. (10) Enterprise The term enterprise means (A) the Federal National Mortgage Association and any affiliate thereof; and (B) the Federal Home Loan Mortgage Corporation and any affiliate thereof. (11) Entity-affiliated party The term entity-affiliated party means (A) any director, officer, employee, or controlling stockholder of, or agent for, a regulated entity; (B) any shareholder, affiliate, consultant, or joint venture partner of a regulated entity, and any other person, as determined by the Director (by regulation or on a case-bycase basis) that participates in the conduct of the affairs of a regulated entity, provided that a member of a Federal Home Loan Bank shall not be deemed to have participated in the affairs of that Bank solely by virtue of being a shareholder of, and obtaining advances from, that Bank; (C) any independent contractor for a regulated entity (including any attorney, appraiser, or accountant), if (i) the independent contractor knowingly or recklessly participates in (I) any violation of any law or regulation; (II) any breach of fiduciary duty; or (III) any unsafe or unsound practice; and (ii) such violation, breach, or practice caused, or is likely to cause, more than a minimal financial loss to, or a significant adverse effect on, the regulated entity; (D) any not-for-profit corporation that receives its principal funding, on an ongoing basis, from any regulated entity; and (E) the Office of Finance. (12) Executive officer The term executive officer means, with respect to an enterprise, the chairman of the board of directors, chief executive officer,

4 4502 TITLE 12 BANKS AND BANKING Page 1590 chief financial officer, president, vice chairman, any executive vice president, and any senior vice president in charge of a principal business unit, division, or function. (13) Limited-life regulated entity The term limited-life regulated entity means an entity established by the Agency under section 4617(i) of this title with respect to a Federal Home Loan Bank in default or in danger of default or with respect to an enterprise in default or in danger of default. (14) Low-income The term low-income means (A) in the case of owner-occupied units, income not in excess of 80 percent of area median income; and (B) in the case of rental units, income not in excess of 80 percent of area median income, with adjustments for smaller and larger families, as determined by the Director. (15) Median income The term median income means, with respect to an area, the unadjusted median family income for the area, as determined and published annually by the Director. (16) Moderate-income The term moderate-income means (A) in the case of owner-occupied units, income not in excess of area median income; and (B) in the case of rental units, income not in excess of area median income, with adjustments for smaller and larger families, as determined by the Director. (17) Mortgage purchases The term mortgage purchases includes mortgages purchased for portfolio or securitization. (18) Multifamily housing The term multifamily housing means a residence consisting of more than 4 dwelling units. (19) Office of Finance The term Office of Finance means the Office of Finance of the Federal Home Loan Bank System (or any successor thereto). (20) Regulated entity The term regulated entity means (A) the Federal National Mortgage Association and any affiliate thereof; (B) the Federal Home Loan Mortgage Corporation and any affiliate thereof; and (C) any Federal Home Loan Bank. (21) Single family housing The term single family housing means a residence consisting of 1 to 4 dwelling units. (22) State The term State means the States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, the Virgin Islands, American Samoa, the Trust Territory of the Pacific Islands, and any other territory or possession of the United States. (23) Total capital The term total capital means, with respect to an enterprise, the sum of the following: (A) The core capital of the enterprise; 1 (B) A general allowance for foreclosure losses, which (i) shall include an allowance for portfolio mortgage losses, an allowance for nonreimbursable foreclosure costs on government claims, and an allowance for liabilities reflected on the balance sheet for the enterprise for estimated foreclosure losses on mortgage-backed securities; and (ii) shall not include any reserves of the enterprise made or held against specific assets. (C) Any other amounts from sources of funds available to absorb losses incurred by the enterprise, that the Director by regulation determines are appropriate to include in determining total capital. (24) Very low-income (A) In general The term very low-income means (i) in the case of owner-occupied units, families having incomes not greater than 50 percent of the area median income; and (ii) in the case of rental units, families having incomes not greater than 50 percent of the area median income, with adjustments for smaller and larger families, as determined by the Director. (B) Rule of construction For purposes of section and 4569 of this title, the term very low-income means (i) in the case of owner-occupied units, income in excess of 30 percent but not greater than 50 percent of the area median income; and (ii) in the case of rental units, income in excess of 30 percent but not greater than 50 percent of the area median income, with adjustments for smaller and larger families, as determined by the Director. (25) Violation The term violation includes any action (alone or in combination with another or others) for or toward causing, bringing about, participating in, counseling, or aiding or abetting a violation. (26) Conforming mortgage The term conforming mortgage means, with respect to an enterprise, a conventional mortgage having an original principal obligation that does not exceed the dollar amount limitation in effect at the time of such origination and applicable to such mortgage, under, as applicable (A) section 302(b)(2) of the Federal National Mortgage Association Charter Act [12 U.S.C. 1717(b)(2)]; or 1 So in original. The semicolon probably should be a period. 2 So in original. Probably should be sections.

5 Page 1591 TITLE 12 BANKS AND BANKING 4503 (B) section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act [12 U.S.C. 1454(a)(2)]. (27) Extremely low-income The term extremely low-income means (A) in the case of owner-occupied units, income not in excess of 30 percent of the area median income; and (B) in the case of rental units, income not in excess of 30 percent of the area median income, with adjustments for smaller and larger families, as determined by the Director. (28) Low-income area The term low-income area means a census tract or block numbering area in which the median income does not exceed 80 percent of the median income for the area in which such census tract or block numbering area is located, and, for the purposes of section 4562(a)(1)(B) of this title, shall include families having incomes not greater than 100 percent of the area median income who reside in minority census tracts and shall include families having incomes not greater than 100 percent of the area median income who reside in designated disaster areas. (29) Minority census tract The term minority census tract means a census tract that has a minority population of at least 30 percent and a median family income of less than 100 percent of the area family median income. (30) Shortage of standard rental units both affordable and available to extremely low-income renter households (A) In general The term shortage of standard rental units both affordable and available to extremely low-income renter households means the gap between (i) the number of units with complete plumbing and kitchen facilities with a rent that is 30 percent or less of 30 percent of the adjusted area median income as determined by the Director that are occupied by extremely low-income renter households or are vacant for rent; and (ii) the number of extremely low-income renter households. (B) Rule of construction If the number of units described in subparagraph (A)(i) exceeds the number of extremely low-income households as described in subparagraph (A)(ii), there is no shortage. (31) Shortage of standard rental units both affordable and available to very low-income renter households (A) In general The term shortage of standard rental units both affordable and available to very low-income renter households means the gap between (i) the number of units with complete plumbing and kitchen facilities with a rent that is 30 percent or less of 50 percent of the adjusted area median income as determined by the Director that are occupied by either extremely low- or very low-income renter households or are vacant for rent; and (ii) the number of extremely low- and very low-income renter households. (B) Rule of construction If the number of units described in subparagraph (A)(i) exceeds the number of extremely low- and very low-income households as described in subparagraph (A)(ii), there is no shortage. (Pub. L , title XIII, 1303, Oct. 28, 1992, 106 Stat. 3942; Pub. L , div. A, 1002(a), title I, 1128(d), July 30, 2008, 122 Stat. 2659, 2702.) REFERENCES IN TEXT This chapter, referred to in text, was in the original this title, meaning title XIII of Pub. L , Oct. 28, 1992, 106 Stat. 3941, which is classified principally to this chapter. For complete classification of title XIII to the Code, see Short Title note set out under section 4501 of this title and Tables. The Federal National Mortgage Association Charter Act, referred to in par. (3)(A), is title III of act June 27, 1934, ch. 847, 48 Stat. 1252, which is classified generally to subchapter III ( 1716 et seq.) of chapter 13 of this title. For complete classification of this Act to the Code, see Short Title note set out under section 1716 of this title and Tables. The Federal Home Loan Mortgage Corporation Act, referred to in par. (3)(B), is title III of Pub. L , July 24, 1970, 84 Stat. 451, which is classified generally to chapter 11A ( 1451 et seq.) of this title. For complete classification of this Act to the Code, see Short Title and Statement of Purpose note set out under section 1451 of this title and Tables. The Federal Home Loan Bank Act, referred to in par. (3)(C), is act July 22, 1932, ch. 522, 47 Stat. 725, which is classified generally to chapter 11 ( 1421 et seq.) of this title. For complete classification of this Act to the Code, see section 1421 of this title and Tables Pub. L , 1002(a)(2) (14), added pars. (2) to (4), (8), (11), (13), (19), (20), and (25), redesignated former pars. (2) to (12) and (16) to (19) as (5) to (7), (9), (10), (12), (14) to (18), and (21) to (24), respectively, substituted Federal Housing Finance Agency for Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development in par. (9), and struck out former pars. (13) to (15) which defined the terms new program, Office, and Secretary, respectively. Pars. (8)(B), (9), (10)(B), (19)(B). Pub. L , 1002(a)(1), substituted Director for Secretary. Par. (24). Pub. L , 1128(d)(1), added par. (24) and struck out former par. (24) which defined the term very low-income. Pars. (26) to (31). Pub. L , 1128(d)(2), added pars. (26) to (31). TERMINATION OF TRUST TERRITORY OF THE PACIFIC ISLANDS For termination of Trust Territory of the Pacific Islands, see note set out preceding section 1681 of Title 48, Territories and Insular Possessions Protection of taxpayers against liability This chapter may not be construed as obligating the Federal Government, either directly or indirectly, to provide any funds to the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, or the Federal

6 4511 TITLE 12 BANKS AND BANKING Page 1592 Home Loan Banks, or to honor, reimburse, or otherwise guarantee any obligation or liability of the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, or the Federal Home Loan Banks. This chapter may not be construed as implying that any such enterprise or Bank, or any obligations or securities of such an enterprise or Bank, are backed by the full faith and credit of the United States. (Pub. L , title XIII, 1304, Oct. 28, 1992, 106 Stat ) REFERENCES IN TEXT This chapter, referred to in text, was in the original This title and the amendments made by this title, meaning title XIII of Pub. L , Oct. 28, 1992, 106 Stat. 3941, which is classified principally to this chapter. For complete classification of title XIII to the Code, see Short Title note set out under section 4501 of this title and Tables. SUBCHAPTER I SUPERVISION AND REGULATION OF ENTERPRISES PART A FINANCIAL SAFETY AND SOUNDNESS REGULATOR Establishment of the Federal Housing Finance Agency (a) Establishment There is established the Federal Housing Finance Agency, which shall be an independent agency of the Federal Government. (b) General supervisory and regulatory authority (1) In general Each regulated entity shall, to the extent provided in this chapter, be subject to the supervision and regulation of the Agency. (2) Authority over Fannie Mae, Freddie Mac, the Federal Home Loan Banks, and the Office of Finance The Director shall have general regulatory authority over each regulated entity and the Office of Finance, and shall exercise such general regulatory authority, including such duties and authorities set forth under section 4513 of this title, to ensure that the purposes of this Act, the authorizing statutes, and any other applicable law are carried out. (c) Savings provision The authority of the Director to take actions under subchapters II and III shall not in any way limit the general supervisory and regulatory authority granted to the Director under subsection (b). (Pub. L , title XIII, 1311, as added Pub. L , div. A, title I, 1101, July 30, 2008, 122 Stat ) REFERENCES IN TEXT This chapter, referred to in subsec. (b)(1), was in the original this title, meaning title XIII of Pub. L , Oct. 28, 1992, 106 Stat. 3941, which is classified principally to this chapter. For complete classification of title XIII to the Code, see Short Title note set out under section 4501 of this title and Tables. This Act, referred to in subsec. (b)(2), is Pub. L , Oct. 28, 1992, 106 Stat. 3672, known as the Housing and Community Development Act of For complete classification of this Act to the Code, see Short Title of 1992 Amendment note set out under section 5301 of Title 42, The Public Health and Welfare, and Tables. PRIOR PROVISIONS A prior section 4511, Pub. L , title XIII, 1311, Oct. 28, 1992, 106 Stat. 3944, related to establishment of the Office of Federal Housing Enterprise Oversight, prior to repeal by Pub. L , div. A, title I, 1101, July 30, 2008, 122 Stat TRANSFER AND RIGHTS OF CERTAIN HUD EMPLOYEES Pub. L , div. A, title I, 1133, July 30, 2008, 122 Stat. 2728, provided that: (a) TRANSFER. Each employee of the Department of Housing and Urban Development whose position responsibilities primarily involve the establishment and enforcement of the housing goals under subpart B of part 2 of subtitle A of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C et seq.) shall be transferred to the Federal Housing Finance Agency for employment, not later than the effective date of the Federal Housing Finance Regulatory Reform Act of 2008 [div. A ( ) of Pub. L , approved July 30, 2008], and such transfer shall be deemed a transfer of function for purposes of section 3503 of title 5, United States Code. (b) GUARANTEED POSITIONS. (1) IN GENERAL. Each employee transferred under subsection (a) shall be guaranteed a position with the same status, tenure, grade, and pay as that held on the day immediately preceding the transfer. (2) NO INVOLUNTARY SEPARATION OR REDUCTION. An employee transferred under subsection (a) holding a permanent position on the day immediately preceding the transfer may not be involuntarily separated or reduced in grade or compensation during the 12- month period beginning on the date of transfer, except for cause, or, in the case of a temporary employee, separated in accordance with the terms of the appointment of the employee. (c) APPOINTMENT AUTHORITY FOR EXCEPTED AND SEN- IOR EXECUTIVE SERVICE EMPLOYEES. (1) IN GENERAL. In the case of an employee occupying a position in the excepted service or the Senior Executive Service, any appointment authority established under law or by regulations of the Office of Personnel Management for filling such position shall be transferred, subject to paragraph (2). (2) DECLINE OF TRANSFER. The Director may decline a transfer of authority under paragraph (1) to the extent that such authority relates to (A) a position excepted from the competitive service because of its confidential, policymaking, policy-determining, or policy-advocating character; or (B) a noncareer position in the Senior Executive Service (within the meaning of section 3132(a)(7) of title 5, United States Code). (d) REORGANIZATION. If the Director determines, after the end of the 1-year period beginning on the effective date of the Federal Housing Finance Regulatory Reform Act of 2008 [div. A ( ) of Pub. L , approved July 30, 2008], that a reorganization of the combined workforce is required, that reorganization shall be deemed a major reorganization for purposes of affording affected employee retirement under section 8336(d)(2) or 8414(b)(1)(B) of title 5, United States Code. (e) EMPLOYEE BENEFIT PROGRAMS. (1) IN GENERAL. Any employee described under subsection (a) accepting employment with the Agency as a result of a transfer under subsection (a) may retain, for 12 months after the date on which such transfer occurs, membership in any employee benefit program of the Agency or the Department of Housing and Urban Development, as applicable, including insurance, to which such employee belongs on such effective date, if

7 Page 1593 TITLE 12 BANKS AND BANKING 4511 (A) the employee does not elect to give up the benefit or membership in the program; and (B) the benefit or program is continued by the Director of the Federal Housing Finance Agency. (2) COST DIFFERENTIAL. (A) IN GENERAL. The difference in the costs between the benefits which would have been provided by the Department of Housing and Urban Development and those provided by this section shall be paid by the Director. (B) HEALTH INSURANCE. If any employee elects to give up membership in a health insurance program or the health insurance program is not continued by the Director, the employee shall be permitted to select an alternate Federal health insurance program not later than 30 days after the date of such election or notice, without regard to any other regularly scheduled open season. [For definitions of terms used in section 1133 of Pub. L , set out above, see section 1002(b) of Pub. L , set out below.] TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY OF OFHEO AND THE FEDERAL HOUSING FINANCE BOARD Pub. L , div. A, title III, July 30, 2008, 122 Stat , provided that: SUBTITLE A OFHEO SEC ABOLISHMENT OF OFHEO. (a) IN GENERAL. Effective at the end of the 1-year period beginning on the date of enactment of this Act [July 30, 2008], the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development and the positions of the Director and Deputy Director of such Office are abolished. (b) DISPOSITION OF AFFAIRS. During the 1-year period beginning on the date of enactment of this Act [July 30, 2008], the Director of the Office of Federal Housing Enterprise Oversight, solely for the purpose of winding up the affairs of the Office of Federal Housing Enterprise Oversight (1) shall manage the employees of such Office and provide for the payment of the compensation and benefits of any such employee which accrue before the effective date of the transfer of such employee under section 1303; and (2) may take any other action necessary for the purpose of winding up the affairs of the Office. (c) STATUS OF EMPLOYEES BEFORE TRANSFER. The amendments made by title I [title I ( ) of div. A of Pub. L , see Tables for classification] and the abolishment of the Office of Federal Housing Enterprise Oversight under subsection (a) of this section may not be construed to affect the status of any employee of such Office as an employee of an agency of the United States for purposes of any other provision of law before the effective date of the transfer of any such employee under section (d) USE OF PROPERTY AND SERVICES. (1) PROPERTY. The Director may use the property of the Office of Federal Housing Enterprise Oversight to perform functions which have been transferred to the Director for such time as is reasonable to facilitate the orderly transfer of functions transferred under any other provision of this Act [see Tables for classification] or any amendment made by this Act to any other provision of law. (2) AGENCY SERVICES. Any agency, department, or other instrumentality of the United States, and any successor to any such agency, department, or instrumentality, which was providing supporting services to the Office of Federal Housing Enterprise Oversight before the expiration of the period under subsection (a) in connection with functions that are transferred to the Director shall (A) continue to provide such services, on a reimbursable basis, until the transfer of such functions is complete; and (B) consult with any such agency to coordinate and facilitate a prompt and reasonable transition. (e) CONTINUATION OF SERVICES. The Director may use the services of employees and other personnel of the Office of Federal Housing Enterprise Oversight, on a reimbursable basis, to perform functions which have been transferred to the Director for such time as is reasonable to facilitate the orderly transfer of functions pursuant to any other provision of this Act [see Tables for classification] or any amendment made by this Act to any other provision of law. (f) SAVINGS PROVISIONS. (1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT AFFECTED. Subsection (a) shall not affect the validity of any right, duty, or obligation of the United States, the Director of the Office of Federal Housing Enterprise Oversight, or any other person, which (A) arises under (i) the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 [12 U.S.C et seq.]; (ii) the Federal National Mortgage Association Charter Act [12 U.S.C et seq.]; (iii) the Federal Home Loan Mortgage Corporation Act [12 U.S.C et seq.]; or (iv) any other provision of law applicable with respect to such Office; and (B) existed on the day before the date of abolishment under subsection (a). (2) CONTINUATION OF SUITS. No action or other proceeding commenced by or against the Director of the Office of Federal Housing Enterprise Oversight in connection with functions that are transferred to the Director of the Federal Housing Finance Agency shall abate by reason of the enactment of this Act [see Tables for classification], except that the Director of the Federal Housing Finance Agency shall be substituted for the Director of the Office of Federal Housing Enterprise Oversight as a party to any such action or proceeding. SEC CONTINUATION AND COORDINATION OF CERTAIN ACTIONS. (a) IN GENERAL. All regulations, orders, and determinations described in subsection (b) shall remain in effect according to the terms of such regulations, orders, and determinations, and shall be enforceable by or against the Director or the Secretary of Housing and Urban Development, as the case may be, until modified, terminated, set aside, or superseded in accordance with applicable law by the Director or the Secretary, as the case may be, any court of competent jurisdiction, or operation of law. (b) APPLICABILITY. A regulation, order, or determination is described in this subsection if it (1) was issued, made, prescribed, or allowed to become effective by (A) the Office of Federal Housing Enterprise Oversight; (B) the Secretary of Housing and Urban Development, and relates to the authority of the Secretary under (i) the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 [12 U.S.C et seq.]; (ii) the Federal National Mortgage Association Charter Act [12 U.S.C et seq.], with respect to the Federal National Mortgage Association; or (iii) the Federal Home Loan Mortgage Corporation Act [12 U.S.C et seq.], with respect to the Federal Home Loan Mortgage Corporation; or (C) a court of competent jurisdiction, and relates to functions transferred by this Act [see Tables for classification]; and (2) is in effect on the effective date of the abolishment under section 1301(a). SEC TRANSFER AND RIGHTS OF EMPLOY- EES OF OFHEO. (a) TRANSFER. Each employee of the Office of Federal Housing Enterprise Oversight shall be transferred to the Agency for employment, not later than the effec-

8 4511 TITLE 12 BANKS AND BANKING Page 1594 tive date of the abolishment under section 1301(a), and such transfer shall be deemed a transfer of function for purposes of section 3503 of title 5, United States Code. (b) GUARANTEED POSITIONS. (1) IN GENERAL. Each employee transferred under subsection (a) shall be guaranteed a position with the same status, tenure, grade, and pay as that held on the day immediately preceding the transfer. (2) NO INVOLUNTARY SEPARATION OR REDUCTION. An employee transferred under subsection (a) holding a permanent position on the day immediately preceding the transfer may not be involuntarily separated or reduced in grade or compensation during the 12- month period beginning on the date of transfer, except for cause, or, in the case of a temporary employee, separated in accordance with the terms of the appointment of the employee. (c) APPOINTMENT AUTHORITY FOR EXCEPTED AND SEN- IOR EXECUTIVE SERVICE EMPLOYEES. (1) IN GENERAL. In the case of an employee occupying a position in the excepted service or the Senior Executive Service, any appointment authority established under law or by regulations of the Office of Personnel Management for filling such position shall be transferred, subject to paragraph (2). (2) DECLINE OF TRANSFER. The Director may decline a transfer of authority under paragraph (1) to the extent that such authority relates to (A) a position excepted from the competitive service because of its confidential, policymaking, policy-determining, or policy-advocating character; or (B) a noncareer position in the Senior Executive Service (within the meaning of section 3132(a)(7) of title 5, United States Code). (d) REORGANIZATION. If the Director determines, after the end of the 1-year period beginning on the effective date of the abolishment under section 1301(a), that a reorganization of the combined workforce is required, that reorganization shall be deemed a major reorganization for purposes of affording affected employee retirement under section 8336(d)(2) or 8414(b)(1)(B) of title 5, United States Code. (e) EMPLOYEE BENEFIT PROGRAMS. (1) IN GENERAL. Any employee of the Office of Federal Housing Enterprise Oversight accepting employment with the Agency as a result of a transfer under subsection (a) may retain, for 12 months after the date on which such transfer occurs, membership in any employee benefit program of the Agency or the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development, as applicable, including insurance, to which such employee belongs on the date of the abolishment under section 1301(a), if (A) the employee does not elect to give up the benefit or membership in the program; and (B) the benefit or program is continued by the Director of the Federal Housing Finance Agency. (2) COST DIFFERENTIAL. (A) IN GENERAL. The difference in the costs between the benefits which would have been provided by the Office of Federal Housing Enterprise Oversight and those provided by this section shall be paid by the Director. (B) HEALTH INSURANCE. If any employee elects to give up membership in a health insurance program or the health insurance program is not continued by the Director, the employee shall be permitted to select an alternate Federal health insurance program not later than 30 days after the date of such election or notice, without regard to any other regularly scheduled open season. SEC TRANSFER OF PROPERTY AND FACILI- TIES. Upon the effective date of its abolishment under section 1301(a), all property of the Office of Federal Housing Enterprise Oversight shall transfer to the Agency. SUBTITLE B FEDERAL HOUSING FINANCE BOARD SEC ABOLISHMENT OF THE FEDERAL HOUS- ING FINANCE BOARD. (a) IN GENERAL. Effective at the end of the 1-year period beginning on the date of enactment of this Act [July 30, 2008], the Federal Housing Finance Board (in this subtitle referred to as the Board ) is abolished. (b) DISPOSITION OF AFFAIRS. During the 1-year period beginning on the date of enactment of this Act [July 30, 2008], the Board, solely for the purpose of winding up the affairs of the Board (1) shall manage the employees of the Board and provide for the payment of the compensation and benefits of any such employee which accrue before the effective date of the transfer of such employee under section 1313; and (2) may take any other action necessary for the purpose of winding up the affairs of the Board. (c) STATUS OF EMPLOYEES BEFORE TRANSFER. The amendments made by titles I and II [titles I ( ) and II ( ) of div. A of Pub. L , see Tables for classification] and the abolishment of the Board under subsection (a) may not be construed to affect the status of any employee of the Board as an employee of an agency of the United States for purposes of any other provision of law before the effective date of the transfer of any such employee under section (d) USE OF PROPERTY AND SERVICES. (1) PROPERTY. The Director may use the property of the Board to perform functions which have been transferred to the Director, for such time as is reasonable to facilitate the orderly transfer of functions transferred under any other provision of this Act [see Tables for classification] or any amendment made by this Act to any other provision of law. (2) AGENCY SERVICES. Any agency, department, or other instrumentality of the United States, and any successor to any such agency, department, or instrumentality, which was providing supporting services to the Board before the expiration of the 1-year period under subsection (a) in connection with functions that are transferred to the Director shall (A) continue to provide such services, on a reimbursable basis, until the transfer of such functions is complete; and (B) consult with any such agency to coordinate and facilitate a prompt and reasonable transition. (e) CONTINUATION OF SERVICES. The Director may use the services of employees and other personnel of the Board, on a reimbursable basis, to perform functions which have been transferred to the Director for such time as is reasonable to facilitate the orderly transfer of functions pursuant to any other provision of this Act [see Tables for classification] or any amendment made by this Act to any other provision of law. (f) SAVINGS PROVISIONS. (1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT AFFECTED. Subsection (a) shall not affect the validity of any right, duty, or obligation of the United States, a member of the Board, or any other person, which (A) arises under the Federal Home Loan Bank Act [12 U.S.C et seq.], or any other provision of law applicable with respect to the Board; and (B) existed on the day before the effective date of the abolishment under subsection (a). (2) CONTINUATION OF SUITS. No action or other proceeding commenced by or against the Board in connection with functions that are transferred under this Act [see Tables for classification] to the Director shall abate by reason of the enactment of this Act, except that the Director shall be substituted for the Board or any member thereof as a party to any such action or proceeding. SEC CONTINUATION AND COORDINATION OF CERTAIN ACTIONS. (a) IN GENERAL. All regulations, orders, determinations, and resolutions described under subsection (b)

9 Page 1595 TITLE 12 BANKS AND BANKING 4512 shall remain in effect according to the terms of such regulations, orders, determinations, and resolutions, and shall be enforceable by or against the Director until modified, terminated, set aside, or superseded in accordance with applicable law by the Director, any court of competent jurisdiction, or operation of law. (b) APPLICABILITY. A regulation, order, determination, or resolution is described under this subsection if it (1) was issued, made, prescribed, or allowed to become effective by (A) the Board; or (B) a court of competent jurisdiction, and relates to functions transferred by this Act [see Tables for classification]; and (2) is in effect on the effective date of the abolishment under section 1311(a). SEC TRANSFER AND RIGHTS OF EMPLOY- EES OF THE FEDERAL HOUSING FINANCE BOARD. (a) TRANSFER. Each employee of the Board shall be transferred to the Agency for employment, not later than the effective date of the abolishment under section 1311(a), and such transfer shall be deemed a transfer of function for purposes of section 3503 of title 5, United States Code. (b) GUARANTEED POSITIONS. (1) IN GENERAL. Each employee transferred under subsection (a) shall be guaranteed a position with the same status, tenure, grade, and pay as that held on the day immediately preceding the transfer. (2) NO INVOLUNTARY SEPARATION OR REDUCTION. An employee holding a permanent position on the day immediately preceding the transfer may not be involuntarily separated or reduced in grade or compensation during the 12-month period beginning on the date of transfer, except for cause, or, if the employee is a temporary employee, separated in accordance with the terms of the appointment of the employee. (c) APPOINTMENT AUTHORITY FOR EXCEPTED EMPLOY- EES. (1) IN GENERAL. In the case of an employee occupying a position in the excepted service, any appointment authority established under law or by regulations of the Office of Personnel Management for filling such position shall be transferred, subject to paragraph (2). (2) DECLINE OF TRANSFER. The Director may decline a transfer of authority under paragraph (1), to the extent that such authority relates to a position excepted from the competitive service because of its confidential, policymaking, policy-determining, or policy-advocating character. (d) REORGANIZATION. If the Director determines, after the end of the 1-year period beginning on the effective date of the abolishment under section 1311(a), that a reorganization of the combined workforce is required, that reorganization shall be deemed a major reorganization for purposes of affording affected employee retirement under section 8336(d)(2) or 8414(b)(1)(B) of title 5, United States Code. (e) EMPLOYEE BENEFIT PROGRAMS. (1) IN GENERAL. Any employee of the Board accepting employment with the Agency as a result of a transfer under subsection (a) may retain, for 12 months after the date on which such transfer occurs, membership in any employee benefit program of the Agency or the Board, as applicable, including insurance, to which such employee belongs on the effective date of the abolishment under section 1311(a) if (A) the employee does not elect to give up the benefit or membership in the program; and (B) the benefit or program is continued by the Director. (2) COST DIFFERENTIAL. (A) IN GENERAL. The difference in the costs between the benefits which would have been provided by the Board and those provided by this section shall be paid by the Director. (B) HEALTH INSURANCE. If any employee elects to give up membership in a health insurance program or the health insurance program is not continued by the Director, the employee shall be permitted to select an alternate Federal health insurance program not later than 30 days after the date of such election or notice, without regard to any other regularly scheduled open season. SEC TRANSFER OF PROPERTY AND FACILI- TIES. Upon the effective date of the abolishment under section 1311(a), all property of the Board shall transfer to the Agency. [For definitions of terms used in title III of Pub. L , set out above, see section 1002(b) of Pub. L , set out below.] DEFINITIONS Pub. L , div. A, 1002(b), July 30, 2008, 122 Stat. 2661, provided that: As used in this Act [see Tables for classification], unless otherwise specified (1) the term Agency means the Federal Housing Finance Agency; (2) the term Director means the Director of the Agency; and (3) the terms enterprise, regulated entity, and authorizing statutes have the same meanings as in section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 [12 U.S.C. 4502], as amended by this Act Director (a) Establishment of position There is established the position of the Director of the Agency, who shall be the head of the Agency. (b) Appointment; term (1) Appointment The Director shall be appointed by the President, by and with the advice and consent of the Senate, from among individuals who are citizens of the United States, have a demonstrated understanding of financial management or oversight, and have a demonstrated understanding of capital markets, including the mortgage securities markets and housing finance. (2) Term The Director shall be appointed for a term of 5 years, unless removed before the end of such term for cause by the President. (3) Vacancy A vacancy in the position of Director that occurs before the expiration of the term for which a Director was appointed shall be filled in the manner established under paragraph (1), and the Director appointed to fill such vacancy shall be appointed only for the remainder of such term. (4) Service after end of term An individual may serve as the Director after the expiration of the term for which appointed until a successor has been appointed. (5) Transitional provision Notwithstanding paragraphs (1) and (2), during the period beginning on the effective date of the Federal Housing Finance Regulatory Reform Act of 2008, and ending on the date on which the Director is appointed and con-

10 4513 TITLE 12 BANKS AND BANKING Page 1596 firmed, the person serving as the Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development on that effective date shall act for all purposes as, and with the full powers of, the Director. (c) Deputy Director of the Division of Enterprise Regulation (1) In general The Agency shall have a Deputy Director of the Division of Enterprise Regulation, who shall be designated by the Director from among individuals who are citizens of the United States, have a demonstrated understanding of financial management or oversight, and have a demonstrated understanding of mortgage securities markets and housing finance. (2) Functions The Deputy Director of the Division of Enterprise Regulation shall have such functions, powers, and duties with respect to the oversight of the enterprises as the Director shall prescribe. (d) Deputy Director of the Division of Federal Home Loan Bank Regulation (1) In general The Agency shall have a Deputy Director of the Division of Federal Home Loan Bank Regulation, who shall be designated by the Director from among individuals who are citizens of the United States, have a demonstrated understanding of financial management or oversight, and have a demonstrated understanding of the Federal Home Loan Bank System and housing finance. (2) Functions The Deputy Director of the Division of Federal Home Loan Bank Regulation shall have such functions, powers, and duties with respect to the oversight of the Federal Home Loan Banks as the Director shall prescribe. (e) Deputy Director for Housing Mission and Goals (1) In general The Agency shall have a Deputy Director for Housing Mission and Goals, who shall be designated by the Director from among individuals who are citizens of the United States, and have a demonstrated understanding of the housing markets and housing finance. (2) Functions The Deputy Director for Housing Mission and Goals shall have such functions, powers, and duties with respect to the oversight of the housing mission and goals of the enterprises, and with respect to oversight of the housing finance and community and economic development mission of the Federal Home Loan Banks, as the Director shall prescribe. (3) Considerations In exercising such functions, powers, and duties, the Deputy Director for Housing Mission and Goals shall consider the differences between the enterprises and the Federal Home Loan Banks, including those described in section 4513(d) of this title. (f) Acting Director In the event of the death, resignation, sickness, or absence of the Director, the President shall designate either the Deputy Director of the Division of Enterprise Regulation, the Deputy Director of the Division of Federal Home Loan Bank Regulation, or the Deputy Director for Housing Mission and Goals, to serve as acting Director until the return of the Director, or the appointment of a successor pursuant to subsection (b). (g) Limitations The Director and each of the Deputy Directors may not (1) have any direct or indirect financial interest in any regulated entity or entity-affiliated party; (2) hold any office, position, or employment in any regulated entity or entity-affiliated party; or (3) have served as an executive officer or director of any regulated entity or entity-affiliated party at any time during the 3-year period preceding the date of appointment or designation of such individual as Director or Deputy Director, as applicable. (Pub. L , title XIII, 1312, as added Pub. L , div. A, title I, 1101, July 30, 2008, 122 Stat ) REFERENCES IN TEXT The effective date of the Federal Housing Finance Regulatory Reform Act of 2008, referred to in subsec. (b)(5), probably means the date of enactment of Pub. L , which was approved July 30, PRIOR PROVISIONS A prior section 4512, Pub. L , title XIII, 1312, Oct. 28, 1992, 106 Stat. 3945, related to the Director and Deputy Director of the Office of Federal Housing Enterprise Oversight, prior to repeal by Pub. L , div. A, title I, 1101, July 30, 2008, 122 Stat Duties and authorities of Director (a) Duties (1) Principal duties The principal duties of the Director shall be (A) to oversee the prudential operations of each regulated entity; and (B) to ensure that (i) each regulated entity operates in a safe and sound manner, including maintenance of adequate capital and internal controls; (ii) the operations and activities of each regulated entity foster liquid, efficient, competitive, and resilient national housing finance markets (including activities relating to mortgages on housing for lowand moderate-income families involving a reasonable economic return that may be less than the return earned on other activities); (iii) each regulated entity complies with this chapter and the rules, regulations, guidelines, and orders issued under this chapter and the authorizing statutes;

11 Page 1597 TITLE 12 BANKS AND BANKING 4513 (iv) each regulated entity carries out its statutory mission only through activities that are authorized under and consistent with this chapter and the authorizing statutes; and (v) the activities of each regulated entity and the manner in which such regulated entity is operated are consistent with the public interest. (2) Scope of authority The authority of the Director shall include the authority (A) to review and, if warranted based on the principal duties described in paragraph (1), reject any acquisition or transfer of a controlling interest in a regulated entity; and (B) to exercise such incidental powers as may be necessary or appropriate to fulfill the duties and responsibilities of the Director in the supervision and regulation of each regulated entity. (3) Coordination with the Chairman of the Board of Governors of the Federal Reserve System (A) Consultation The Director shall consult with, and consider the views of, the Chairman of the Board of Governors of the Federal Reserve System, with respect to the risks posed by the regulated entities to the financial system, prior to issuing any proposed or final regulations, orders, and guidelines with respect to the exercise of the additional authority provided in this Act regarding prudential management and operations standards, safe and sound operations of, and capital requirements and portfolio standards applicable to the regulated entities (as such term is defined in section 4502 of this title). The Director also shall consult with the Chairman regarding any decision to place a regulated entity into conservatorship or receivership. (B) Information sharing To facilitate the consultative process, the Director shall share information with the Board of Governors of the Federal Reserve System on a regular, periodic basis as determined by the Director and the Board regarding the capital, asset and liabilities, financial condition, and risk management practices of the regulated entities as well as any information related to financial market stability. (C) Termination of consultation requirement The requirement of the Director to consult with the Board of Governors of the Federal Reserve System under this paragraph shall expire at the conclusion of December 31, (b) Delegation of authority The Director may delegate to officers and employees of the Agency any of the functions, powers, or duties of the Director, as the Director considers appropriate. (c) Litigation authority (1) In general In enforcing any provision of this chapter, any regulation or order prescribed under this chapter, or any other provision of law, rule, regulation, or order, or in any other action, suit, or proceeding to which the Director is a party or in which the Director is interested, and in the administration of conservatorships and receiverships, the Director may act in the Director s own name and through the Director s own attorneys. (2) Subject to suit Except as otherwise provided by law, the Director shall be subject to suit (other than suits on claims for money damages) by a regulated entity with respect to any matter under this chapter or any other applicable provision of law, rule, order, or regulation under this chapter, in the United States district court for the judicial district in which the regulated entity has its principal place of business, or in the United States District Court for the District of Columbia, and the Director may be served with process in the manner prescribed by the Federal Rules of Civil Procedure. (f) 1 Recognition of distinctions between the enterprises and the Federal Home Loan Banks Prior to promulgating any regulation or taking any other formal or informal agency action of general applicability and future effect relating to the Federal Home Loan Banks (other than any regulation, advisory document, or examination guidance of the Federal Housing Finance Board that the Director reissues after the authority of the Director over the Federal Home Loan Banks takes effect), including the issuance of an advisory document or examination guidance, the Director shall consider the differences between the Federal Home Loan Banks and the enterprises with respect to (1) the Banks (A) cooperative ownership structure; (B) the 2 mission of providing liquidity to members; (C) affordable housing and community development mission; (D) capital structure; and (E) joint and several liability; and (2) any other differences that the Director considers appropriate. (Pub. L , title XIII, 1313, Oct. 28, 1992, 106 Stat. 3945; Pub. L , title II, 202(b), Oct. 21, 1998, 112 Stat. 2483; Pub. L , div. A, 122, Oct. 21, 1998, 112 Stat ; Pub. L , div. A, title I, 1102(a), 1118, title II, 1201, July 30, 2008, 122 Stat. 2663, 2688, 2782.) REFERENCES IN TEXT This chapter, referred to in subsecs. (a)(1)(b)(iii), (iv) and (c), was in the original this title, meaning title XIII of Pub. L , Oct. 28, 1992, 106 Stat. 3941, which is classified principally to this chapter. For complete classification of title XIII to the Code, see Short Title note set out under section 4501 of this title and Tables. 1 So in original. No subsecs. (d) and (e) have been enacted. 2 So in original. The word the probably should not appear.

12 4513a TITLE 12 BANKS AND BANKING Page 1598 This Act, referred to in subsec. (a)(3)(a), is Pub. L , Oct. 28, 1992, 106 Stat. 3672, known as the Housing and Community Development Act of For complete classification of this Act to the Code, see Short Title of 1992 Amendment note set out under section 5301 of Title 42, The Public Health and Welfare, and Tables. The Federal Rules of Civil Procedure, referred to in subsec. (c)(2), are set out in the Appendix to Title 28, Judiciary and Judicial Procedure Pub. L , 1102(a), amended section generally. Prior to amendment, section consisted of subsecs. (a) to (e) relating to duty and authority of the Director of Office of Federal Housing Enterprise Oversight. Subsec. (a)(3). Pub. L , 1118, added par. (3). Subsec. (f). Pub. L , 1201, added subsec. (f) Subsec. (b)(9) to (12). Pub. L , which directed the amendment of subsec. (b) by redesignating pars. (9) to (11) as (10) to (12), respectively, and adding a new par. (9) which read default loss protection levels under section 1454(a)(2)(D) of this title; was repealed by Pub. L , effective upon enactment of Pub. L EFFECTIVE DATE OF 1998 AMENDMENT Pub. L , div. A, 122, Oct. 21, 1998, 112 Stat , provided that the amendment made by section 122 is effective upon enactment of Pub. L (Oct. 21, 1998). 4513a. Federal Housing Finance Oversight Board (a) In general There is established the Federal Housing Finance Oversight Board, which shall advise the Director with respect to overall strategies and policies in carrying out the duties of the Director under this chapter. (b) Limitations The Board may not exercise any executive authority, and the Director may not delegate to the Board any of the functions, powers, or duties of the Director. (c) Composition The Board shall be comprised of 4 members, of whom (1) 1 member shall be the Secretary of the Treasury; (2) 1 member shall be the Secretary of Housing and Urban Development; (3) 1 member shall be the Chairman of the Securities and Exchange Commission; and (4) 1 member shall be the Director, who shall serve as the Chairperson of the Board. (d) Meetings (1) In general The Board shall meet upon notice by the Director, but in no event shall the Board meet less frequently than once every 3 months. (2) Special meetings Either the Secretary of the Treasury, the Secretary of Housing and Urban Development, or the Chairman of the Securities and Exchange Commission may, upon giving written notice to the Director, require a special meeting of the Board. (e) Testimony On an annual basis, the Board shall testify before Congress regarding (1) the safety and soundness of the regulated entities; (2) any material deficiencies in the conduct of the operations of the regulated entities; (3) the overall operational status of the regulated entities; (4) an evaluation of the performance of the regulated entities in carrying out their respective missions; (5) operations, resources, and performance of the Agency; and (6) such other matters relating to the Agency and its fulfillment of its mission, as the Board determines appropriate. (Pub. L , title XIII, 1313A, as added Pub. L , div. A, title I, 1103(a), July 30, 2008, 122 Stat ) REFERENCES IN TEXT This chapter, referred to in subsec. (a), was in the original this title, meaning title XIII of Pub. L , Oct. 28, 1992, 106 Stat. 3941, which is classified principally to this chapter. For complete classification of title XIII to the Code, see Short Title note set out under section 4501 of this title and Tables. 4513b. Prudential management and operations standards (a) Standards The Director shall establish standards, by regulation or guideline, for each regulated entity relating to (1) adequacy of internal controls and information systems taking into account the nature and scale of business operations; (2) independence and adequacy of internal audit systems; (3) management of interest rate risk exposure; (4) management of market risk, including standards that provide for systems that accurately measure, monitor, and control market risks and, as warranted, that establish limitations on market risk; (5) adequacy and maintenance of liquidity and reserves; (6) management of asset and investment portfolio growth; (7) investments and acquisitions of assets by a regulated entity, to ensure that they are consistent with the purposes of this chapter and the authorizing statutes; (8) overall risk management processes, including adequacy of oversight by senior management and the board of directors and of processes and policies to identify, measure, monitor, and control material risks, including reputational risks, and for adequate, well-tested business resumption plans for all major systems with remote site facilities to protect against disruptive events; (9) management of credit and counterparty risk, including systems to identify concentrations of credit risk and prudential limits to restrict exposure of the regulated entity to a single counterparty or groups of related counterparties; (10) maintenance of adequate records, in accordance with consistent accounting policies and practices that enable the Director to evaluate the financial condition of the regulated entity; and

13 Page 1599 TITLE 12 BANKS AND BANKING 4514 (11) such other operational and management standards as the Director determines to be appropriate. (b) Failure to meet standards (1) Plan requirement (A) In general If the Director determines that a regulated entity fails to meet any standard established under subsection (a) (i) if such standard is established by regulation, the Director shall require the regulated entity to submit an acceptable plan to the Director within the time allowed under subparagraph (C); and (ii) if such standard is established by guideline, the Director may require the regulated entity to submit a plan described in clause (i). (B) Contents Any plan required under subparagraph (A) shall specify the actions that the regulated entity will take to correct the deficiency. If the regulated entity is undercapitalized, the plan may be a part of the capital restoration plan for the regulated entity under section 4622 of this title. (C) Deadlines for submission and review The Director shall by regulation establish deadlines that (i) provide the regulated entities with reasonable time to submit plans required under subparagraph (A), and generally require a regulated entity to submit a plan not later than 30 days after the Director determines that the entity fails to meet any standard established under subsection (a); and (ii) require the Director to act on plans expeditiously, and generally not later than 30 days after the plan is submitted. (2) Required order upon failure to submit or implement plan If a regulated entity fails to submit an acceptable plan within the time allowed under paragraph (1)(C), or fails in any material respect to implement a plan accepted by the Director, the following shall apply: (A) Required correction of deficiency The Director shall, by order, require the regulated entity to correct the deficiency. (B) Other authority The Director may, by order, take one or more of the following actions until the deficiency is corrected: (i) Prohibit the regulated entity from permitting its average total assets (as such term is defined in section 4516(b) of this title) during any calendar quarter to exceed its average total assets during the preceding calendar quarter, or restrict the rate at which the average total assets of the entity may increase from one calendar quarter to another. (ii) Require the regulated entity (I) in the case of an enterprise, to increase its ratio of core capital to assets. (II) in the case of a Federal Home Loan Bank, to increase its ratio of total capital (as such term is defined in section 1426(a)(5) of this title) to assets. (iii) Require the regulated entity to take any other action that the Director determines will better carry out the purposes of this section than any of the actions described in this subparagraph. (3) Mandatory restrictions In complying with paragraph (2), the Director shall take one or more of the actions described in clauses (i) through (iii) of paragraph (2)(B) if (A) the Director determines that the regulated entity fails to meet any standard prescribed under subsection (a); (B) the regulated entity has not corrected the deficiency; and (C) during the 18-month period before the date on which the regulated entity first failed to meet the standard, the entity underwent extraordinary growth, as defined by the Director. (c) Other enforcement authority not affected The authority of the Director under this section is in addition to any other authority of the Director. (Pub. L , title XIII, 1313B, as added Pub. L , div. A, title I, 1108, July 30, 2008, 122 Stat ) REFERENCES IN TEXT This chapter, referred to in subsec. (a)(7), was in the original this title, meaning title XIII of Pub. L , Oct. 28, 1992, 106 Stat. 3941, which is classified principally to this chapter. For complete classification of title XIII to the Code, see Short Title note set out under section 4501 of this title and Tables Authority to require reports by regulated entities (a) Regular and special reports (1) Regular reports The Director may require, by general or specific orders, a regulated entity to submit regular reports, including financial statements determined on a fair value basis, on the condition (including financial condition), management, activities, or operations of the regulated entity, as the Director considers appropriate (in addition to the annual and quarterly reports required under section 1723a(k) of this title and section 1456(c) of this title). (2) Special reports The Director may also require, by general or specific orders, a regulated entity to submit special reports on any of the topics specified in paragraph (1) or any other relevant topics, if, in the judgment of the Director, such reports are necessary to carry out the purposes of this chapter. (3) Limitation The Director may not require the inclusion, in any report pursuant to paragraph (1) or (2), of any information that is not reasonably obtainable by the regulated entity.

14 4514 TITLE 12 BANKS AND BANKING Page 1600 (4) Notice and declaration The Director shall notify the regulated entity, a reasonable period in advance of the date for submission of any report under this subsection, of any specific information to be contained in the report and the date for the submission of the report. Each report under this subsection shall contain a declaration by the president, vice president, treasurer, or any other officer designated by the board of directors of the regulated entity to make such declaration, that the report is true and correct to the best of such officer s knowledge and belief. (b) Capital distributions The Director may require a regulated entity to submit a report to the Director after the declaration of any capital distribution by the regulated entity and before making the capital distribution. The report shall be made in such form and under such circumstances and shall contain such information as the Director shall require. (c) Penalties for failure to make reports (1) Violations It shall be a violation of this section for any regulated entity (A) to fail to make, transmit, or publish any report or obtain any information required by the Director under this section, section 1723a(k) of this title, section 1456(c) of this title, or section 1440 of this title, within the period of time specified in such provision of law or otherwise by the Director; or (B) to submit or publish any false or misleading report or information under this section. (2) Penalties (A) First tier (i) In general A violation described in paragraph (1) shall be subject to a penalty of not more than $2,000 for each day during which such violation continues, in any case in which (I) the subject regulated entity maintains procedures reasonably adapted to avoid any inadvertent error and the violation was unintentional and a result of such an error; or (II) the violation was an inadvertent transmittal or publication of any report which was minimally late. (ii) Burden of proof For purposes of this subparagraph, the regulated entity shall have the burden of proving that the error was inadvertent or that a report was inadvertently transmitted or published late. (B) Second tier A violation described in paragraph (1) shall be subject to a penalty of not more than $20,000 for each day during which such violation continues or such false or misleading information is not corrected, in any case that is not addressed in subparagraph (A) or (C). (C) Third tier A violation described in paragraph (1) shall be subject to a penalty of not more than $1,000,000 per day for each day during which such violation continues or such false or misleading information is not corrected, in any case in which the subject regulated entity committed such violation knowingly or with reckless disregard for the accuracy of any such information or report. (3) Assessments Any penalty imposed under this subsection shall be in lieu of a penalty under section 4636 of this title, but shall be assessed and collected by the Director in the manner provided in section 4636 of this title for penalties imposed under that section, and any such assessment (including the determination of the amount of the penalty) shall be otherwise subject to the provisions of section 4636 of this title. (4) Hearing A regulated entity against which a penalty is assessed under this section shall be afforded an agency hearing if the regulated entity submits a request for a hearing not later than 20 days after the date of the issuance of the notice of assessment. Section 4634 of this title shall apply to any such proceedings. (Pub. L , title XIII, 1314, Oct. 28, 1992, 106 Stat. 3946; Pub. L , div. A, title I, 1104(a), July 30, 2008, 122 Stat ) REFERENCES IN TEXT This chapter, referred to in subsec. (a)(2), was in the original this title, meaning title XIII of Pub. L , Oct. 28, 1992, 106 Stat. 3941, which is classified principally to this chapter. For complete classification of title XIII to the Code, see Short Title note set out under section 4501 of this title and Tables Pub. L , 1104(a)(1), substituted regulated entities for enterprises in section catchline. Subsec. (a). Pub. L , 1104(a)(4)(A), substituted Regular and special reports for Special reports and reports of financial condition in subsec. heading, Regular reports for Financial condition in par. (1) heading, and The Director may require, by general or specific orders, a regulated entity to submit regular reports, including financial statements determined on a fair value basis, on the condition (including financial condition), management, activities, or operations of the regulated entity, as the Director considers appropriate for The Director may require an enterprise to submit reports of financial condition and operations in par. (1). Subsec. (a)(2). Pub. L , 1104(a)(4)(B), inserted, by general or specific orders, after may also require and substituted on any of the topics specified in paragraph (1) or any other relevant topics, if for whenever. Pub. L , 1104(a)(2), substituted a regulated entity for an enterprise. Subsec. (a)(3), (4). Pub. L , 1104(a)(3), which directed amendment of this section by substituting the regulated entity for the enterprise, was executed by making the substitution wherever appearing to reflect the probable intent of Congress. Subsec. (b). Pub. L , 1104(a)(3), which directed amendment of this section by substituting the regulated entity for the enterprise, was executed by making the substitution wherever appearing to reflect the probable intent of Congress. Pub. L , 1104(a)(2), substituted a regulated entity for an enterprise. Subsec. (c). Pub. L , 1104(a)(5), added subsec. (c).

15 Page 1601 TITLE 12 BANKS AND BANKING a. Study and reports on guarantee fees (a) Ongoing study of fees The Director shall conduct an ongoing study of fees charged by enterprises for guaranteeing a mortgage. (b) Collection of data The Director shall, by regulation or order, establish procedures for the collection of data from enterprises for purposes of this subsection, 1 including the format and the process for collection of such data. (c) Reports to Congress The Director shall annually submit a report to Congress on the results of the study conducted under subsection (a), based on the aggregated data collected under subsection (a) for the subject year, regarding the amount of such fees and the criteria used by the enterprises to determine such fees. (d) Contents of reports The reports required under subsection (c) shall identify and analyze (1) the factors considered in determining the amount of the guarantee fees charged; (2) the total revenue earned by the enterprises from guarantee fees; (3) the total costs incurred by the enterprises for providing guarantees; (4) the average guarantee fee charged by the enterprises; (5) an analysis of any increase or decrease in guarantee fees from the preceding year; (6) a breakdown of the revenue and costs associated with providing guarantees, based on product type and risk classifications; and (7) a breakdown of guarantee fees charged based on asset size of the originator and the number of loans sold or transferred to an enterprise. (e) Protection of information Nothing in this section may be construed to require or authorize the Director to publicly disclose information that is confidential or proprietary. (Pub. L , div. A, title VI, 1601, July 30, 2008, 122 Stat ) CODIFICATION Section was enacted as part of the Federal Housing Finance Regulatory Reform Act of 2008, and also as part of the Housing and Economic Recovery Act of 2008, and not as part of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 which comprises this chapter. DEFINITIONS For definitions of terms used in this section, see section 1002(b) of Pub. L , set out as a note under section 4511 of this title Personnel (a) In general Subject to title III of the Federal Housing Finance Regulatory Reform Act of 2008, the Director may appoint and fix the compensation of 1 So in original. Probably should be section. such officers and employees of the Agency as the Director considers necessary to carry out the functions of the Director and the Agency. Officers and employees may be paid without regard to the provisions of chapter 51 and subchapter III of chapter 53 of title 5 relating to classification and General Schedule pay rates. (b) Comparability of compensation with Federal banking agencies In fixing and directing compensation under subsection (a) of this section, the Director shall consult with, and maintain comparability with compensation of officers and employees of the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation. (c) Personnel of other Federal agencies In carrying out the duties of the Agency, the Director may use information, services, staff, and facilities of any executive agency, independent agency, or department on a reimbursable basis, with the consent of such agency or department. (d) Outside experts and consultants Notwithstanding any provision of law limiting pay or compensation, the Director may appoint and compensate such outside experts and consultants as the Director determines necessary to assist the work of the Agency. (Pub. L , title XIII, 1315, Oct. 28, 1992, 106 Stat. 3947; Pub. L , div. A, title I, 1161(a)(1), July 30, 2008, 122 Stat. 2778; Pub. L , title III, 365(1), July 21, 2010, 124 Stat ) REFERENCES IN TEXT The Federal Housing Finance Regulatory Reform Act of 2008, referred to in subsec. (a), is div. A of Pub. L , July 30, 2008, 122 Stat Title III of div. A of the Pub. L is set out as a note under section 4511 of this title. For complete classification of Pub. L to the Code, see Short Title note under section 4501 of this title and Tables Subsec. (b). Pub. L substituted and the Federal Deposit Insurance Corporation. for the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision Subsec. (a). Pub. L , 1161(a)(1)(A), substituted In General for Office personnel in heading, Subject to title III of the Federal Housing Finance Regulatory Reform Act of 2008, the for The, and the Agency for the Office in two places. Subsec. (c). Pub. L , 1161(a)(1)(B), substituted the Agency for the Office. Subsec. (d). Pub. L , 1161(a)(1)(D), redesignated subsec. (e) as (d) and struck out former subsec. (d). Prior to amendment, text read as follows: The Director shall reimburse the Department of Housing and Urban Development for reasonable costs incurred by the Department that are directly related to the operations of the Office. Subsec. (e). Pub. L , 1161(a)(1)(C), (D), substituted the Agency for the Office and redesignated subsec. (e) as (d). Subsec. (f). Pub. L , 1161(a)(1)(E), struck out subsec. (f). Text read as follows: Not later than the expiration of the 180-day period beginning upon the appointment of the Director under section 4512 of this title, the Director shall submit to the Committee on

16 4516 TITLE 12 BANKS AND BANKING Page 1602 Banking, Finance and Urban Affairs of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate a report containing (1) a complete description of the equal opportunity, affirmative action, and minority business enterprise utilization programs of the Office; and (2) such recommendations for administrative and legislative action as the Director determines appropriate to carry out such programs. EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L effective on the transfer date, see section 351 of Pub. L , set out as a note under section 906 of Title 2, The Congress Funding (a) Annual assessments The Director shall establish and collect from the regulated entities annual assessments in an amount not exceeding the amount sufficient to provide for reasonable costs (including administrative costs) and expenses of the Agency, including (1) the expenses of any examinations under section 4517 of this title and under section 1440 of this title; (2) the expenses of obtaining any reviews and credit assessments under section 4519 of this title; (3) such amounts in excess of actual expenses for any given year as deemed necessary by the Director to maintain a working capital fund in accordance with subsection (e); and (4) the windup of the affairs of the Office of Federal Housing Enterprise Oversight and the Federal Housing Finance Board under title III of the Federal Housing Finance Regulatory Reform Act of (b) Allocation of annual assessment to enterprises (1) Amount of payment Each enterprise shall pay to the Director a proportion of the annual assessment made pursuant to subsection (a) of this section that bears the same ratio to the total annual assessment that the total assets of each enterprise bears 1 to the total assets of both enterprises. (2) Separate treatment of Federal home loan bank and enterprise assessments Assessments collected from the enterprises shall not exceed the amounts sufficient to provide for the costs and expenses described in subsection (a) relating to the enterprises. Assessments collected from the Federal Home Loan Banks shall not exceed the amounts sufficient to provide for the costs and expenses described in subsection (a) relating to the Federal Home Loan Banks. (3) Timing of payment The annual assessment shall be payable semiannually for each fiscal year, on October 1 and April 1. (4) Total assets defined For the purpose of this section, the term total assets means, with respect to an enterprise, the sum of 1 So in original. Probably should be bear. (A) on-balance-sheet assets of the enterprise, as determined in accordance with generally accepted accounting principles; (B) the unpaid principal balance of outstanding mortgage-backed securities issued or guaranteed by the enterprise that are not included in subparagraph (A); and (C) other off-balance-sheet obligations as determined by the Director. (c) Increased costs of regulation (1) Increase for inadequate capitalization The semiannual payments made pursuant to subsection (b) by any regulated entity that is not classified (for purposes of subchapter II) as adequately capitalized may be increased, as necessary, in the discretion of the Director to pay additional estimated costs of regulation of the regulated entity. (2) Adjustment for enforcement activities The Director may adjust the amounts of any semiannual payments for an assessment under subsection (a) that are to be paid pursuant to subsection (b) by a regulated entity, as necessary in the discretion of the Director, to ensure that the costs of enforcement activities under this Act for a regulated entity are borne only by such regulated entity. (3) Additional assessment for deficiencies If at any time, as a result of increased costs of regulation of a regulated entity that is not classified (for purposes of subchapter II) as adequately capitalized or as the result of supervisory or enforcement activities under this Act for a regulated entity, the amount available from any semiannual payment made by such regulated entity pursuant to subsection (b) is insufficient to cover the costs of the Agency with respect to such entity, the Director may make and collect from such regulated entity an immediate assessment to cover the amount of such deficiency for the semiannual period. If, at the end of any semiannual period during which such an assessment is made, any amount remains from such assessment, such remaining amount shall be deducted from the assessment for such regulated entity for the following semiannual period. (d) Surplus Except with respect to amounts collected pursuant to subsection (a)(3), if any amount from any annual assessment collected from an enterprise remains unobligated at the end of the year for which the assessment was collected, such amount shall be credited to the assessment to be collected from the enterprise for the following year. (e) Working capital fund At the end of each year for which an assessment under this section is made, the Director shall remit to each regulated entity any amount of assessment collected from such regulated entity that is attributable to subsection (a)(3) and is in excess of the amount the Director deems necessary to maintain a working capital fund. (f) Treatment of assessments (1) Deposit Amounts received by the Director from assessments under this section may be deposited

17 Page 1603 TITLE 12 BANKS AND BANKING 4516 by the Director in the manner provided in section 192 of this title for monies deposited by the Comptroller of the Currency. (2) Not Government funds The amounts received by the Director from any assessment under this section shall not be construed to be Government or public funds or appropriated money. (3) No apportionment of funds Notwithstanding any other provision of law, the amounts received by the Director from any assessment under this section shall not be subject to apportionment for the purpose of chapter 15 of title 31 or under any other authority. (4) Use of funds The Director may use any amounts received by the Director from assessments under this section for compensation of the Director and other employees of the Agency and for all other expenses of the Director and the Agency. (5) Availability of oversight fund amounts Notwithstanding any other provision of law, any amounts remaining in the Federal Housing Enterprises Oversight Fund established under this section (as in effect before the effective date of the Federal Housing Finance Regulatory Reform Act of 2008, and any amounts remaining from assessments on the Federal Home Loan Banks pursuant to section 1438(b) 2 of this title), shall, upon such effective date, be treated for purposes of this subsection as amounts received from assessments under this section. (6) Treasury investments (A) Authority The Director may request the Secretary of the Treasury to invest such portions of amounts received by the Director from assessments paid under this section that, in the Director s discretion, are not required to meet the current working needs of the Agency. (B) Government obligations Pursuant to a request under subparagraph (A), the Secretary of the Treasury shall invest such amounts in Government obligations guaranteed as to principal and interest by the United States with maturities suitable to the needs of the Agency and bearing interest at a rate determined by the Secretary of the Treasury taking into consideration current market yields on outstanding marketable obligations of the United States of comparable maturity. (g) Budget and financial management (1) Financial operating plans and forecasts 2 See References in Text note below. The Director shall provide to the Director of the Office of Management and Budget copies of the Director s financial operating plans and forecasts, as prepared by the Director in the ordinary course of the Agency s operations, and copies of the quarterly reports of the Agency s financial condition and results of operations, as prepared by the Director in the ordinary course of the Agency s operations. (2) Financial statements The Agency shall prepare annually a statement of (A) assets and liabilities and surplus or deficit; (B) income and expenses; and (C) sources and application of funds. (3) Financial management systems The Agency shall implement and maintain financial management systems that (A) comply substantially with Federal financial management systems requirements and applicable Federal accounting standards; and (B) use a general ledger system that accounts for activity at the transaction level. (4) Assertion of internal controls The Director shall provide to the Comptroller General of the United States an assertion as to the effectiveness of the internal controls that apply to financial reporting by the Agency, using the standards established in section 3512(c) of title 31. (5) Rule of construction This subsection may not be construed as implying any obligation on the part of the Director to consult with or obtain the consent or approval of the Director of the Office of Management and Budget with respect to any report, plan, forecast, or other information referred to in paragraph (1) or any jurisdiction or oversight over the affairs or operations of the Agency. (h) Audit of Agency (1) In general The Comptroller General shall annually audit the financial transactions of the Agency in accordance with the United States generally accepted government auditing standards as may be prescribed by the Comptroller General of the United States. The audit shall be conducted at the place or places where accounts of the Agency are normally kept. The representatives of the Government Accountability Office shall have access to the personnel and to all books, accounts, documents, papers, records (including electronic records), reports, files, and all other papers, automated data, things, or property belonging to or under the control of or used or employed by the Agency pertaining to its financial transactions and necessary to facilitate the audit, and such representatives shall be afforded full facilities for verifying transactions with the balances or securities held by depositories, fiscal agents, and custodians. All such books, accounts, documents, records, reports, files, papers, and property of the Agency shall remain in possession and custody of the Agency. The Comptroller General may obtain and duplicate any such books, accounts, documents, records, working papers, automated data and files, or other information relevant to such audit without cost to the Comptroller General and the Comptroller General s right of access to such

18 4517 TITLE 12 BANKS AND BANKING Page 1604 information shall be enforceable pursuant to section 716(c) of title 31. (2) Report The Comptroller General shall submit to the Congress a report of each annual audit conducted under this subsection. The report to the Congress shall set forth the scope of the audit and shall include the statement of assets and liabilities and surplus or deficit, the statement of income and expenses, the statement of sources and application of funds, and such comments and information as may be deemed necessary to inform Congress of the financial operations and condition of the Agency, together with such recommendations with respect thereto as the Comptroller General may deem advisable. A copy of each report shall be furnished to the President and to the Agency at the time submitted to the Congress. (3) Assistance and costs For the purpose of conducting an audit under this subsection, the Comptroller General may, in the discretion of the Comptroller General, employ by contract, without regard to section 6101 of title 41, professional services of firms and organizations of certified public accountants for temporary periods or for special purposes. Upon the request of the Comptroller General, the Director of the Agency shall transfer to the Government Accountability Office from funds available, the amount requested by the Comptroller General to cover the full costs of any audit and report conducted by the Comptroller General. The Comptroller General shall credit funds transferred to the account established for salaries and expenses of the Government Accountability Office, and such amount shall be available upon receipt and without fiscal year limitation to cover the full costs of the audit and report. (Pub. L , title XIII, 1316, Oct. 28, 1992, 106 Stat. 3947; Pub. L , title I, 101(e) [title II, 211], Apr. 26, 1996, 110 Stat , ; renumbered title I, Pub. L , 1(a), May 2, 1996, 110 Stat. 1327; Pub. L , div. A, title I, 1106, July 30, 2008, 122 Stat ) REFERENCES IN TEXT The Federal Housing Finance Regulatory Reform Act of 2008, referred to in subsec. (a)(4), is div. A of Pub. L , July 30, 2008, 122 Stat Title III of div. A of the Pub. L is set out as a note under section 4511 of this title. For complete classification of Pub. L to the Code, see Short Title note under section 4501 of this title and Tables. This Act, referred to in subsec. (c)(2), (3), is Pub. L , Oct. 28, 1992, 106 Stat. 3672, known as the Housing and Community Development Act of For complete classification of this Act to the Code, see Short Title of 1992 Amendment note set out under section 5301 of Title 42, The Public Health and Welfare, and Tables. The effective date of the Federal Housing Finance Regulatory Reform Act of 2008, referred to in subsec. (f)(5), probably means the date of enactment of div. A of Pub. L , which was approved July 30, Section 1438(b) of this title, referred to in subsec. (f)(5), was repealed by Pub. L , div. A, title II, 1204(2), July 30, 2008, 122 Stat CODIFICATION In subsec. (h)(3), section 6101 of title 41 substituted for section 3709 of the Revised Statutes of the United States (41 U.S.C. 5) on authority of Pub. L , 6(c), Jan. 4, 2011, 124 Stat. 3854, which Act enacted Title 41, Public Contracts Subsec. (a). Pub. L , 1106(1), added subsec. (a) and struck out former subsec. (a). Prior to amendment, text read as follows: The Director may, to the extent provided in appropriation Acts, establish and collect from the enterprises annual assessments in an amount not exceeding the amount sufficient to provide for reasonable costs and expenses of the Office, including the expenses of any examinations under section 4517 of this title. The initial annual assessment shall include any startup costs of the Office and any anticipated costs and expenses of the Office for the following fiscal year. Subsec. (b)(2) to (4). Pub. L , 1106(2), realigned margins, added par. (2), and redesignated former pars. (2) and (3) as (3) and (4), respectively. Subsec. (c). Pub. L , 1106(3), added subsec. (c) and struck out former subsec. (c). Prior to amendment, text read as follows: The semiannual payments made pursuant to subsection (b) of this section by any enterprise that is not classified (for purposes of subchapter II of this chapter) as adequately capitalized may be increased, as necessary, in the discretion of the Director to pay additional estimated costs of regulation of the enterprise. Subsec. (d). Pub. L , 1106(4), substituted Except with respect to amounts collected pursuant to subsection (a)(3), if for If. Subsecs. (e) to (h). Pub. L , 1106(5), added subsecs. (e) to (h) and struck out former subsecs. (e) to (g) which related, respectively, to initial special assessment, the Federal Housing Enterprises Oversight Fund, and budget and financial reports Subsec. (b)(2). Pub. L added par. (2) and struck out heading and text of former par. (2). Text read as follows: The annual assessment shall be payable semiannually on September 1 and March 1 of the year for which the assessment is made. NON-REDUCTION OF FIRST ANNUAL ASSESSMENT Pub. L , title II, Oct. 28, 1993, 107 Stat. 1290, provided that notwithstanding the last sentence of subsec. (e) of this section, the amount of this first annual assessment was not to be reduced by any part of the amount of the initial special assessment under subsec. (e) Examinations (a) Annual examination The Director shall annually conduct an on-site examination under this section of each regulated entity to determine the condition of the regulated entity for the purpose of ensuring its financial safety and soundness. (b) Other examinations In addition to annual examinations under subsection (a) of this section, the Director may conduct an examination under this section of a regulated entity whenever the Director determines that an examination is necessary or appropriate. (c) Examiners The Director shall appoint examiners to conduct examinations under this section. The Director may contract with the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, or the Federal Deposit Insurance Corporation for the services of examiners to conduct examinations under this section. The Director shall reimburse such agencies for any costs of providing examiners from amounts

19 Page 1605 TITLE 12 BANKS AND BANKING 4518 available in the Federal Housing Enterprises Oversight Fund. (d) Inspector General There shall be within the Agency an Inspector General, who shall be appointed in accordance with section 3(a) of the Inspector General Act of (e) Law applicable to examiners The Director and each examiner shall have the same authority and each examiner shall be subject to the same disclosures, prohibitions, obligations, and penalties as are applicable to examiners employed by the Federal Reserve banks. (f) Technical experts The Director may obtain the services of any technical experts the Director considers appropriate to provide temporary technical assistance relating to examinations to the Director, officers, and employees of the Office. The Director shall describe, in the record of each examination, the nature and extent of any such temporary technical assistance. (g) Oaths, evidence, and subpoena powers In connection with examinations under this section, the Director shall have the authority provided under section 4641 of this title. (h) Appointment of accountants, economists, and examiners (1) Applicability This section shall apply with respect to any position of examiner, accountant, economist, and specialist in financial markets and in technology at the Agency, with respect to supervision and regulation of the regulated entities, that is in the competitive service. (2) Appointment authority The Director may appoint candidates to any position described in paragraph (1) (A) in accordance with the statutes, rules, and regulations governing appointments in the excepted service; and (B) notwithstanding any statutes, rules, and regulations governing appointments in the competitive service. (i) Ombudsman The Director shall establish, by regulation, an Office of the Ombudsman within the Agency, which shall be responsible for considering complaints and appeals, from any regulated entity and any person that has a business relationship with a regulated entity, regarding any matter relating to the regulation and supervision of such regulated entity by the Agency. The regulation issued by the Director under this subsection shall specify the authority and duties of the Office of the Ombudsman. (Pub. L , title XIII, 1317, Oct. 28, 1992, 106 Stat. 3949; Pub. L , div. A, title I, 1105(a), (b), (e), 1153(b)(1)(A), July 30, 2008, 122 Stat. 2667, 2668, 2774; Pub. L , title III, 365(2), July 21, 2010, 124 Stat ) REFERENCES IN TEXT Section 3(a) of the Inspector General Act of 1978, referred to in subsec. (d), is section 3(a) of Pub. L , which is set out in the Appendix to Title 5, Government Organization and Employees Subsec. (c). Pub. L substituted or the Federal Deposit Insurance Corporation for the Federal Deposit Insurance Corporation, or the Director of the Office of Thrift Supervision Subsec. (a). Pub. L , 1105(a)(1), substituted regulated entity for enterprise in two places. Subsec. (b). Pub. L , 1105(a)(2), inserted of a regulated entity after under this section and substituted or appropriate for to determine the condition of an enterprise for the purpose of ensuring its financial safety and soundness. Subsec. (c). Pub. L , 1105(a)(3), inserted to conduct examinations under this section after services of examiners. Subsecs. (d) to (f). Pub. L , 1105(a)(4), (5), added subsec. (d) and redesignated former subsecs. (d) and (e) as (e) and (f), respectively. Former subsec. (f) redesignated (g). Subsec. (g). Pub. L , 1153(b)(1)(A), which directed technical amendment in subsec. (f) to reference in original act which appears in text as reference to section 4641 of this title, was executed by making the amendment in subsec. (g), to reflect the probable intent of Congress and the redesignation of subsec. (f) as (g) by Pub. L , 1105(a)(4). See below. Pub. L , 1105(a)(4), redesignated subsec. (f) as (g). Subsec. (h). Pub. L , 1105(b), added subsec. (h). Subsec. (i). Pub. L , 1105(e), added subsec. (i). EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L effective on the transfer date, see section 351 of Pub. L , set out as a note under section 906 of Title 2, The Congress Prohibition and withholding of executive compensation (a) In general The Director shall prohibit the regulated entities from providing compensation to any executive officer of the regulated entity that is not reasonable and comparable with compensation for employment in other similar businesses (including other publicly held financial institutions or major financial services companies) involving similar duties and responsibilities. (b) Factors In making any determination under subsection (a), the Director may take into consideration any factors the Director considers relevant, including any wrongdoing on the part of the executive officer, and such wrongdoing shall include any fraudulent act or omission, breach of trust or fiduciary duty, violation of law, rule, regulation, order, or written agreement, and insider abuse with respect to the regulated entity. The approval of an agreement or contract pursuant to section 1723a(d)(3)(B) of this title or section 1452(h)(2) of this title shall not preclude the Director from making any subsequent determination under subsection (a). (c) Withholding of compensation In carrying out subsection (a), the Director may require a regulated entity to withhold any payment, transfer, or disbursement of compensation to an executive officer, or to place such compensation in an escrow account, during the review of the reasonableness and comparability of compensation.

20 4518 TITLE 12 BANKS AND BANKING Page 1606 (d) Prohibition of setting compensation In carrying out subsection (a) of this section, the Director may not prescribe or set a specific level or range of compensation. (e) Authority to regulate or prohibit certain forms of benefits to affiliated parties (1) Golden parachutes and indemnification payments The Director may prohibit or limit, by regulation or order, any golden parachute payment or indemnification payment. (2) Factors to be taken into account The Director shall prescribe, by regulation, the factors to be considered by the Director in taking any action pursuant to paragraph (1), which may include such factors as (A) whether there is a reasonable basis to believe that the affiliated party has committed any fraudulent act or omission, breach of trust or fiduciary duty, or insider abuse with regard to the regulated entity that has had a material effect on the financial condition of the regulated entity; (B) whether there is a reasonable basis to believe that the affiliated party is substantially responsible for the insolvency of the regulated entity, the appointment of a conservator or receiver for the regulated entity, or the troubled condition of the regulated entity (as defined in regulations prescribed by the Director); (C) whether there is a reasonable basis to believe that the affiliated party has materially violated any applicable provision of Federal or State law or regulation that has had a material effect on the financial condition of the regulated entity; (D) whether the affiliated party was in a position of managerial or fiduciary responsibility; and (E) the length of time that the party was affiliated with the regulated entity, and the degree to which (i) the payment reasonably reflects compensation earned over the period of employment; and (ii) the compensation involved represents a reasonable payment for services rendered. (3) Certain payments prohibited No regulated entity may prepay the salary or any liability or legal expense of any affiliated party if such payment is made (A) in contemplation of the insolvency of such regulated entity, or after the commission of an act of insolvency; and (B) with a view to, or having the result of (i) preventing the proper application of the assets of the regulated entity to creditors; or (ii) preferring one creditor over another. (4) Golden parachute payment defined (A) In general For purposes of this subsection, the term golden parachute payment means any payment (or any agreement to make any payment) in the nature of compensation by any regulated entity for the benefit of any affiliated party pursuant to an obligation of such regulated entity that (i) is contingent on the termination of such party s affiliation with the regulated entity; and (ii) is received on or after the date on which (I) the regulated entity became insolvent; (II) any conservator or receiver is appointed for such regulated entity; or (III) the Director determines that the regulated entity is in a troubled condition (as defined in the regulations of the Director). (B) Certain payments in contemplation of an event Any payment which would be a golden parachute payment but for the fact that such payment was made before the date referred to in subparagraph (A)(ii) shall be treated as a golden parachute payment if the payment was made in contemplation of the occurrence of an event described in any subclause of such subparagraph. (C) Certain payments not included For purposes of this subsection, the term golden parachute payment shall not include (i) any payment made pursuant to a retirement plan which is qualified (or is intended to be qualified) under section 401 of title 26, or other nondiscriminatory benefit plan; (ii) any payment made pursuant to a bona fide deferred compensation plan or arrangement which the Director determines, by regulation or order, to be permissible; or (iii) any payment made by reason of the death or disability of an affiliated party. (5) Other definitions For purposes of this subsection, the following definitions shall apply: (A) Indemnification payment Subject to paragraph (6), the term indemnification payment means any payment (or any agreement to make any payment) by any regulated entity for the benefit of any person who is or was an affiliated party, to pay or reimburse such person for any liability or legal expense with regard to any administrative proceeding or civil action instituted by the Agency which results in a final order under which such person (i) is assessed a civil money penalty; (ii) is removed or prohibited from participating in conduct of the affairs of the regulated entity; or (iii) is required to take any affirmative action to correct certain conditions resulting from violations or practices, by order of the Director. (B) Liability or legal expense The term liability or legal expense means